If you had asked me last week for a thumbnail sketch of Standard Chartered, I might have said: ‘Steadily profitable overseas bank, strong historic franchise in Asia and Africa, keeps its nose clean.’I might have added that Peter Sands, its chief executive, and Lord (Mervyn) Davies, his predecessor who went on to serve as trade minister, are among the few British bankers whose reputations have actually risen in recent years. But suddenly this dull old dog of the international banking scene stands accused in New York of being a ‘rogue institution’, up to its neck in Iranian sanctions-busting, and its share price has plunged by a quarter in response.
The allegation is that the bank processed $250 billion of illegal transactions with Iranian institutions, but Standard Chartered says the actual figure is no more than $14 million. US regulators have a history of excessive zeal in pursuit of foreign firms suspected of flouting sanctions that have generally failed (as they have so far in Iran) to deter or dislodge the regimes against which they are targeted: Barclays, Lloyds and Credit Suisse are among those previously fined for Iranian connections. I will be very surprised if these accusations against Standard Chartered stand up in full — but then I am constantly surprised by transgressive patterns of behaviour across the whole banking world these days. So let us wait and see.
Against the odds
‘We’re all deluding ourselves,’ was one reader’s comment on last week’s round-up of indicators that seem to contradict dismal double-dip GDP numbers. I think he meant that the most deluded of us all is me, because I insist on accentuating the positive, but his remark prompted a new thought: if it was delusion that got us into this mess, it will be delusion that gets us out of it again.
Sages from Sir Mervyn King downwards seem close to despair, so profound is the economic crisis, so inadequate the political response, so corroded the capitalist machinery on which recovery depends. And yet the young, or many of them, just don’t get it: they have never seen a recession before, they never really wanted secure lifetime employment like their parents, and they are unworldly enough to think it’s still worth having a go. They are the ones who are starting new businesses at the rate of more than 1,700 a day: a total of almost 300,000 so far this year according to Startup Britain, which channels Companies House data into a tracker website designed to offer would-be entrepreneurs the encouragement that they are not alone.
A wave of creative destruction is clearly afoot — one in which births markedly outnumber deaths. A relatively high rate of retail bankruptcies (including big names such as Clinton Cards) gives the impression that businesses are collapsing all around us, but in fact the overall level of corporate insolvencies, at around 4,000 per quarter, is down on last year; likewise personal insolvencies, 27,390 in the second quarter, are at their lowest since 2008.
David Cameron has tried to use the Olympics as a platform to attract large-scale inward investment. An ‘£8 billion redevelopment’ of Battersea power station by Malaysian owners is trumpeted — though an industrial hulk that has sunk successive investment schemes over 35 years is hardly the role model we need. A new wave of Asian-owned assembly plants and Gulf-funded shopping malls would certainly help, but the bandwagon the government needs to push is the one represented by Startup Britain. Employers’ National Insurance exemption, additional business rate relief, free space in empty public buildings: there are many ways to help fledgling businesses at modest cost to the Exchequer, beside the Bank of England’s ‘funding for lending’ to lubricate credit. The generation that believes the triumph of Team GB is an inspiration for life, rather than a circus distraction, is the generation whose deluded optimism against the odds will eventually lead us to recovery. The government should get behind them.
Vin de table
I have learned to steer clear of talking politics when I’m on holiday in France. My Dordogne commune voted 163 to 115 for Hollande against Sarkozy, but the wrong remark (crowing about Olympic medals, say) can still provoke outbursts of Le Pen-ism. So I was glad to find Le Figaro answering one question I wanted to ask: 87 per cent of the paper’s poll respondents think Hollande is trying too hard to look ‘normal’.
The most recent manifestation of this urge to distance himself from his predecessor’s bling-bling was a stroll on a Mediterranean beach looking pudgy in loose-fitting leisurewear, in contrast to the Sarkozy flash of manly chest alongside Carla Bruni’s tiny bikini. Hollande wants (illogically, you might think) to depersonalise presidential politics, but the French would prefer him to rise statesmanlike to the challenge — and so far he just looks out of his depth, as well as hen-pecked by his past and present consorts. The fact that French government bonds have been commanding safe-haven yields just above 2 per cent is hardly a salute, more a signal that markets don’t think he’s got sufficient grip yet to do any serious damage.
Meanwhile, the Olympic afterglow and David Cameron’s proffered ‘red carpet’ will surely persuade a wave of young French entrepreneurs to relocate to London and avoid socialist tax rates. And I can report that the new president is even doing his bit to boost British winemakers. Whereas Nicolas Sarkozy made a show of drinking Coca-Cola but serving only the grandest crus to his guests, François Hollande lets it be known he likes nothing better than an honest vin de table. At a market stall in Tulle (the Corrèze town where he used to be mayor) he recently sampled an earthy little number from Cahors and declared he must take some for the Elysée cellar — unaware that it came from vines owned by a London banker. Given his much-vaunted hostility to Anglo-Saxon finance, I’d call that supping with the enemy.